1. “ Revision of Marpol Annex VI and its implications for the Gulf region ” Peter M. Swift, MD, INTERTANKO 15 December 2008, Dubai

2. “ Revision of Marpol Annex VI and its implications for the Gulf region” “ Revision of Marpol Annex VI and its implications for the Gulf region ” Air Emissions from Shipping - observations on process and practical aspects

3. Air Emissions from Shipping Classical Pollutants – SOx, NOx, PM [MARPOL Annex VI] Green House Gases – GHGs, principally CO 2

4. MARPOL Annex VI: Evolution (Regulatory) Origins in IMO in early 1990s Annex VI adopted in 1997 Annex VI entered into force in 2005 – revisions proposed immediately thereafter EU Sulphur Directive in 1999 & Thematic studies (2000+) set unilateral challenge California (2005) led US programmes Local legislation emerged in Norway et al, and pending in Japan et al

5. MARPOL Annex VI: Evolution (Political) Environmental impact of SOx, NOx, PM often local / regional rather than global Environmental Lobby coordinated and effective Shipping Industry support for change initially very limited –Many reactive, few pro-active, some very anti Economic drivers mostly negative –Extra costs for refiners and owners

6. Annex VI Amendments : in summary Compromise accepted by all with adoption in 2008 – tacit approval procedure means entry into force on 1 July 2010 New regulation on SOx and by default on PM Primary compliance through fuel Alternative methodologies (e.g. scrubbers) accepted as Equivalent Measures (but first to be approved by Administrations) Marine fuel oil quality to be further improved No measures to be taken against ships that do not receive adequate supply Guidelines how to assess compliance if BDN data is challenged by PSC or test results NOx Tier I on large engines already from the 1990s NOx Tier II and Tier III on new engines

7. MARPOL Annex VI Amendments GLOBAL S cap ECA S cap Tier IITier III ECA only 2010 (July 1 st) 4.50%1.00% - - - - - 2011 yes - - - - - 20123.50%- - - - - 20150.10% - - - - - 2016yes 2020 / 2025 0.50%

8. Annex VI: SOx Regulations New ECA areas could be?: USA West Coast Mediterranean Others? Particulate matter regulated by the sulphur content of the fuel or by scrubber technology [3335624.19.05.2008 LS/KEA] 8

9. NOx emissions – Tier II (new engines) Tier II standards (emission reductions related to Tier I limits): –15.5% reduction (engines with n<130 rpm) (i.e. 14.36 g/kWh) – reductions between 15.5% and 21.8% depending on the engine’s rpm (engines with 130 rpm < n < 2000 rpm) –21.8% reduction (engines n > 2000 rpm) (i.e. 7.66 g/kWh) Applies to engines installed on ships constructed on and after 1 January 2011

10. NOx emissions-Tier III (new engines) Tier III standards – 80% reductions from Tier I limits, applicable when ships in ECA only Tier III limits apply to engines: –installed on ships constructed on & after 1 Jan 2016 –power output of > 130 kW (but engines between 130 kW – 750 kW may be exempted by the Administration) Outside ECAs - Tier II limits only Emission levels for Tier III are as follows: –3.40 g/kWh (engines with n<130 rpm) –9*n(-0.2) g/kWh (engines with 130 rpm < n < 2000 rpm) –1.96 g/kWh (engines n > 2000 rpm)

11. Annex VI Amendments: In summary Compromise - positive but not perfect Positives: –avoids fragmented regional legislation –contributes to a long-term and predictable global regulatory regime –ensures a solid platform of requirements –is realistic and feasible –achieves a global, long-term and positive reduction of air emissions from ships But

12. Regional Requirements - Still a potential problem   Planned new ECAs (for 2013) ?   Could be extended to entire N. A.   Up to 200 nm on the West Coast   Plan to require 0.1% or 0.2% S fuels

13. Global / Regional Sulphur cap GLOBALECAEU (in port) California (24 nm) 2010 (July 1st) 4.50%1.00%0.10%0.50% 20123.50% 20150.10% 2020/20250.50%

14. Some practical problems remain Still need to use 2/3 fuels per voyage for few more years Need for two differing cylinder lube oil systems (one for HSFO and one for LSFO/Distillate) Fuel quality issues, especially with blending of LS fuels Incompatability and other problems during change overs Safety and cross-contamination issues when switching from HFO to MDO in boilers (EU and California)

15. Green House Gas (CO 2 ) Emissions Driven primarily by a limited number of governments –Supported mostly by EU governments, plus Japan, Australia and a few others –Only limited support in US (mostly environmental interests) –Very little enthusiasm in much of the developing world Environmental Lobby growing –Not yet fully coordinated Maritime industries showing considerable support –Proactive involvement –Although “hesitant” on market based instruments Economic incentives strong –High cost of bunker fuel / softening freight markets

16. 16 The Good News : CO 2 Emissions per Unit Load by Transport Mode Source:Ministry of Land, Infrastructure and Transport (Japan): The Survey on Transport Energy 2001/2002 MOL (Japan): Environmental and Social Report 2004 Large Tanker Large Containership Railway Coastal Carrier Small-size Commercial Truck Airplane Standard-size Commercial Truck 100200300400 398 226 49 11 6 3 1 0 Units Relative

17. The Good News: Shipping’s GREEN Credentials This car, weighing one tonne, uses 1 litre of fuel to move 20 kms This oil tanker uses 1 litre of fuel to move one tonne of cargo 2,500 kms –more than twice as far as 20 years ago

18. The Good News : VOC Emissions Voluntary/Regulatory Measures Tanker industry introduced voluntary measures to reduce VOC emissions from cargo on passage in 2002 – cutting these by approximately 80% IMO MARPOL Annex VI revisions will incorporate these in 2008, and take effect in 2010

19. GHG reductions: Voluntary Measures already underway Speed optimisation Voyage optimisation Capacity optimisation

20. GHGs : IMO Regulatory Development IMO voluntary operating index since 2004 Ship Performance Index: CO 2 / work done IMO developing: For New Ships : Design Index (Mandatory) Best practice guidance on measures to reduce CO 2 emissions (Ship Efficiency Management Plan) and For Ships in Service : Operational Index (Non-mandatory) IMO initiated GHG work in 1998 IMO2000 GHG study, updated 2008

21. SEMP Drafted 1.Programme for Measuring and Monitoring Ship Efficiency 2.Voyage Optimization Programme 1.Speed selection optimization 2.Optimised route planning 3.Trim Optimization 3.Propulsion Resistance Management Programme 1.Hull Resistance 2.Propeller Resistance 4.Machinery Optimisation Programme 1.Main Engine monitoring and optimisation 2.Optimisation of lubrication as well as other machinery and equipment 5.Cargo Handling Optimization 1.Cargo vapours control procedure on all crude tankers (80-90% reduction of cargo vapours) 2.Cargo temperature control optimization 6.Energy Conservation Awareness Plan 1.On board and on shore training and familiarisation of company’s efficiency programme 2.Accommodation-specific energy conservation programme

22. Optimising speed and voyage schedule http://www.ocimf.com/view_document.cfm?id=1147 Liaison encouraged between owners and charterers to optimise vessel speed and voyage schedules

23. Market Based Instruments Bunker Levy / Compensation Scheme Emissions Trading Scheme Other, e.g. differentiated charges Guiding principles: any measure should: Be effective in reducing global GHG emissions Be binding on and applicable to all flag states Be cost effective Not (significantly) distort competition Support sustainable environmental development without penalising trade growth Promote technical innovation and leading technologies Be practical, transparent, fraud-free, easy to administer

24. THANK YOU “Proud of our people, Proud of our ships” For more information, please visit: www.intertanko.com www.maritimefoundation.com www.poseidonchallenge.com www.shippingfacts.com

25. Hebei Spirit – A plea for justice Captain Jasprit Chawla & Chief Officer Syam Chetan of Hong Kong-based tanker Hebei Spirit

26. Regulation 4 – Equivalent measures An Administration may allow any alternative method only if this is at least as effective in terms of emissions reductions as the emission reductions by using LSFO This means the Administration (and not the ship) have to acknowledge that alternative methods: –have equivalent efficiency in terms of SOx, PM & NOx –do not harm the environment –operate within the requirements of the IMO guidelines

27. Regulation 15 Volatile Organic Compounds All tankers carrying crude oil shall have on board an approved VOC-Management Plan describing all the procedures the ship is applying in order to minimize the emissions of VOC Apart from that, there is no requirement for equipment or technical installations to limit the emissions Work is underway to a draft VOC Management Plan model to be submitted to IMO